Tritax Eurobox Share Shuffling – What Does This Mean?

Tritax Eurobox PLC (LON: EBOX) shares are being shuffled a little between varied large-scale holders. The net result on the share price is proving to be not very much – Tritax is actually dead level at pixel time.

There are two announcements today about shareholdings in Tritax Eurobox (it’s necessary to be careful and distinguish between Eurobox and the related Tritax Bigbox). CCLA Investment Management has topped up their formerly 4.3% holding to just over 5%. Moving the other way Hazelview Investments has sold out of 1.5% of Tritax to leave them with a fraction under 3% of the stock in issue.

By and large and around and about the total shuffle is pretty much flat for Tritax – which is presumably why no grand movement in the share price as a result.

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As background Tritax Eurobox is definitely in an interesting area. The acquisition of land for those massive warehouses for online shopping logistics and then the construction of and rental/leasing out of them. There’s a landrace going on to produce the Europe-wide networks of exactly these extremely large sheds.

It’s also true that the strategy has done well for that sister company, Tritax Bigbox, which performs the same task here in the UK. So there’s definite evidence that it’s a workable path to tread.

But then comes execution. As such strategies mature it’s the price of the land acquisition as compared to what everyone else is also doing that matters. As so often. Tritax isn’t working in a vacuum, there is competition. Prices that can be charged depend upon how many others are using the same tactics, prices that must be paid for sites depend on how many other bidders there are. So, that this worked profitably in the UK is not a guarantee that it will across Europe, merely a guide.

That introduces uncertainty. Then there’s the obvious enough point that continued expansion requires more capital Tritax Eurobox had a £250 million equity issue in September 2021 and then another private placement of £300 million in December. Yes, we get it, a growing business requires more capital. But then that does expose shareholders in Tritax Eurobox to those demands for more capital or, if not taken up, dilution of interest. There’s nothing wrong with that requirement for more capital, it’s just one of those things that needs to be taken into account when deciding upon a share valuation. How likely is it that Tritax is going to come back and ask for more?

In the short term we might think that this is unlikely, Those capital raises are not yet spent. That also means that we might assume that there will be no substantial revaluation until they are spent. Only once what land has been bought to build what can we work out the value of those capital raises.

Finally, with two such substantial capital raises there’s going to be a certain surplus of shares on hte market. Only once those are mopped up and into secure long term hands – today’s shuffle being a part of that perhaps – is there really room for any substantial rise without hitting some selling.

It’s possible there will be a price breakout at Tritax, given the market and positioning. But when is the big question, given recent share issuance.